A Resolution Concerning the Use of Credit Information in Personal Insurance

Summary

This resolution opposes any state laws or regulations that ban or impose significant limits on the use of credit information in personal insurance rating and underwriting decisions.

Model Resolution

WHEREAS, insurance is the most important area of economic activity regulated almost entirely at the state level in the United States and;

WHEREAS, a functioning insurance market depends on the fair, effective use of data relevant to risk;

WHEREAS, studies by the Federal Trade Commission, the Texas Department of Insurance, and academic researchers at the University of Pennsylvania and Cornell University have found that credit scores correlate strongly with personal insurance claims behavior;

WHEREAS, there is no evidence that the use of credit information in setting insurance rates unfairly impacts groups identified by age, race, sex, or any other category widely protected by law;

WHEREAS, used properly, credit based insurance scores should be one, among many factors, that an insurer uses to set an insurance rate;

WHEREAS, credit information should never be the sole factor involved in an insurance rating or underwriting decision without consideration of other factors;

WHEREAS, the preponderance of the evidence reveals that allowing insurers to use credit based insurance scores in determining insurance rates results in lower rates for the majority of consumers and fairer rates for all;

WHEREAS, any disparate impact analysis of the use of credit under the Fair Housing Act should not, consistent with the McCarran-Ferguson Act, impair, invalidate or supersede any state law regulating the use of credit, including the filed rate doctrine under state court decisions;

WHEREAS, the National Conference of Insurance Legislators (NCOIL) has drafted, approved and periodically updated a Model Act Regarding the Use of Credit Information in Personal Insurance;

WHEREAS, twenty nine (29) states have adopted the NCOIL model or statutes functionally equivalent to it.

THEREFORE, BE IT RESOLVED [insert state here] commends and endorses the current version of the NCOIL Model Act Regarding the Use of Credit Information in Personal Insurance attached hereto;

BE IT FURTHER RESOLVED that [insert state here] endorses the reasonable use of credit information in personal insurance rating and underwriting;

BE IT FURTHER RESOLVED that [insert state here] opposes any state laws or regulations that ban or impose significant limits on the use of credit information in personal insurance rating and underwriting decisions.